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The funds had been frozen earlier this 12 months because of U.S. sanctions on Alrosa that had been imposed in April 2022 by the U.S. Treasury’s Workplace of Overseas Property Management, two of the sources mentioned. Each the sources are Indian authorities officers, who declined to establish themselves or the businesses, citing the sensitivity of the matter.
The freeze is the primary recognized punitive sanctions measure towards any Indian enterprise since Russia‘s full-scale invasion of Ukraine final 12 months and subsequent Western sanctions on Russian entities.
The diamond merchants’ funds had been frozen when United Arab Emirates-based models of the unspecified Indian firms tried to switch them to purchase tough diamonds, one authorities supply and one trade supply mentioned.
One of many sources mentioned that banks halted the greenback transaction.
Reuters couldn’t decide if the cash was being transferred to Alrosa or one other occasion. “The federal government is conscious of the OFAC motion and has initiated dialogue over it,” one of many Indian authorities sources mentioned, with out figuring out the U.S. counterparty. “The issue was suspicion of commerce hyperlinks with Alrosa.” The Indian companies impacted by the motion have advised the federal government the funds had been meant both for non-sanctioned Russian entities or for orders accomplished earlier than the sanctions on Alrosa got here into impact, the supply mentioned.
“OFAC itself doesn’t freeze or block transactions,” a U.S. Treasury spokesperson mentioned. “U.S. individuals are required to dam or reject transactions in accordance with the related sanctions program.”
Overseas banks or different entities operating afoul of OFAC sanctions danger being lower off from the dollar-based monetary system, however the Treasury does enable entities to use for common or particular licenses to finish some transactions.
State-controlled Alrosa, the world’s largest producer of tough diamonds, didn’t reply to an e mail in search of remark. India’s commerce and international ministries didn’t reply to requests for remark.
India has the world’s largest diamond processing capability and exported polished diamonds price greater than $22 billion final fiscal 12 months that ended on March 31. The trade, based mostly primarily within the western state of Gujarat, buys tough diamonds from suppliers in nations such because the United Arab Emirates, Belgium and Russia.
Alrosa has managed to take care of regular diamond gross sales regardless of the U.S. sanctions, which weren’t adopted by the European Union. Some G7 nations have referred to as for tighter sanctions on Russia’s diamond commerce.
